The UK government and UK trade confederations such as the Social Enterprise Coalition have a working definition of social enterprise. They are
"businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners."
There are many debates around the true definition, but in a nutshell a social enterprise is an organisation that:
- trades goods and services for a social purpose
- makes a profit (yes it's ok to make profits!)
- uses the majority of their profits for social and environmental goals.
This could mean investing their profit to benefit a community in need, running the business in a way that minimises damage to the planet and making sure that the business creates new opportunities for people through jobs or services. These can be summarised as the Three Ps:
People, Planet and Profit
Social Enterprise is the fastest growing business model in Europe, it:
- Tackles social and environmental problems
- Raises the bar for corporate responsibility
- Improves public services and shape public service delivery
- Offers a high level of engagement with users
- Pioneers new approaches to existing problems
- Encourages under-represented groups (e.g. women, youth and offenders)
What 'forms' do Social Enterprises take?
Social enterprises come in many shapes and sizes, from community-owned village shops to large development trusts, and in many legal forms, including community interest companies, industrial and provident societies and companies limited by guarantee, among others. Whatever form they take, social enterprises prove that social and environmental responsibility can be combined with financial success.
In which economic sectors do social enterprises work?
Social enterprises are active in a wide range of industries. According to a DTI survey in 2005, health and social care services is the largest category of trading activity for social enterprises as it was the principal trading income source for 33% of respondents, followed by education at 15%. Social enterprises are also extremely active in the energy, transport and recycling markets. However a social enterprise can be successful in any market - from an employee-owned bicycle shop to an IT consultancy firm hiring people with Asperger's syndrome.
What is the difference between a social enterprise and ethical business?
The two are distinct business models. A social enterprise's main purpose is to fulfil its social and/or environmental goals. This is achieved by reinvesting the majority of the profits back into the business. An ethical business tries to achieve its financial goals while minimising any negative impact on society or the environment.
Why is it important for social enterprises to make a profit?
Social enterprises are businesses. They need to make a profit to compete in the market, to ensure their continued survival and to invest in their social or environmental aims. For many social enterprises, being sustainable - in every sense of the word - enables them to become more independent and to reduce any dependency on public grants. It also ensures they can continue to help provide a solution for a social or environmental problem.
Is my business a social enterprise?
If you generate the bulk of your income from trading and use the majority of your profits to further social or environmental goals then your business or charity might be classed as a social enterprise. In February 2010 the Social Enterprise Mark was launched as the brand for social enterprises. It requires a business to meet six defined criteria in order to qualify to receive the Mark. To find out more visit the Social Enterprise Mark website - www.socialenterprisemark.org.uk
For further information on social enterprise - simply click on the links to the left or download our leaflet in the 'DOWNLOADS' box above.
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